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Sunday, April 8, 2012

BIG’s Blog: Monthly Donors and Big Gifts

If you are a regular reader of my blog you’re going to think I am singling out Penelope Burk, president of Cygnus Applied Research, to pick on again. For those who missed last Friday’s blog, Ms. Burk was speaking at an AFP conference in Vancouver, and last Friday I wrote a stinging rebuke to her quotes and recommendations as reported in a Philanthropy Today article dealing with major gift fundraisers. Guess what? The very next day, the same reporter from Philanthropy Today had another story with yet more opinions and recommendations for fundraisers from Ms. Burk’s AFP presentation. And again, I am not trying to single out Ms. Burk as being the only person making what appear to be statements based upon research when they are, in fact, merely highly questionable opinions. And if they were accurately reported, they are so egregious that they need to be “called out.”The title of the article is Don’t Expect Too Much From Monthly Donors. Ms. Burk’s warning and theme is: Donors who give every month to charity aren’t very likely to make a big gift. “Does being a monthly-giver donor cause you to be more likely to entertain a major-gift ask?” The answer, Ms. Burk says, is “No.” She then goes on to qualify her statement, “That doesn’t mean there’s no point in trying to convert some monthly donors into big contributors, but expectations should be low,” she said. “The smart plan is to look in other places to find wealthy people with the potential to give large sums. The best strategy to close major gifts or planned gifts is not to draw from existing feeder programs,” Ms. Burk said. Whoa, where do I begin?First of all, my greatest concern is that these recommendations come from someone who is standing on the legitimacy of research as the underpinning of her recommendations when, in fact, they are opinions based upon an erroneous social view and completely devoid of fact. You don’t have to be a mathematician or economist to understand the Pareto Principle, or what is commonly called the 80/20 rule. The rule says that, for instance, 20% of any given population own 80% of the assets, or that 20% of all car salesmen sell 80% of all cars, or that 20% of the population pays 80% of all taxes. It is an accepted economic principle that is as valid today as it was in 1906 when it was first formulated and published. Ms. Burk focuses on monthly-gift donors who, any fundraiser quantifiably knows, are her most committed donors. And like any population, 20% (or some number approximating 20%) will give 80% of the monthly gift donation total. Just like 20% of any appeal donors will give dollars approximating 80% of the dollar totals. This also plays out in capital campaigns as well. Experienced fundraisers know this to be fact. When Ms. Burk states that “there’s no point in trying to convert some monthly donors into big contributors,” she is stating the absolute truth of the Pareto Principle. Of course only 20% of monthly-givers are viable targets for major gifts. But Ms. Burk doesn’t understand or acknowledge that principle. She states, “The smart plan is to look in other places to find wealthy people with the potential to give large gifts.” Huh? Let’s assume I am a Development Director with a direct marketing program with 100,000 donors of which 8,000 are monthly givers. Ms. Burk is telling me to disregard the Pareto Principle and “look in other places to find wealthy people with the potential to give large sums.” In Ms. Burk’s worldview, these “wealthy people in other places” would somehow be as committed or more committed to our mission and give large donations but, unlike our current donors, would never give a smaller donation or give a smaller amount monthly. These “wealthy people from other places” would never respond to mail or other communication devices like the rest of the population. They are somehow different. “The best strategy to close major gifts or planned gifts is not to draw from existing feeder programs,” Ms. Burk says.Hemingway is famously supposed to have told F. Scott Fitzgerald that “the rich are different than you and I.” “Yes, Hem,” Fitzgerald is supposed to have said. “They have more money.”Fitzgerald had it right while Hemingway had bought into the erroneous cultural view.Let me be extremely clear. It is from your base of current donors including your monthly-givers that you will find your major donors. You do not have to worry that the Pareto Principle is going to be overturned by a researcher speaking at an AFP conference anymore than you might worry about Ms. Burk overturning the Bell Curve or the Pythagorean Theorem. Unsubstantiated opinions passing as research-based recommendations happen in every sector of the economy, not just the nonprofit fundraising sector.Just be skeptical and use the normal sniff test of common sense and reason. -MikeWelcome to BIG's Blog! Please feel free to forward this post to your friends and coworkers...and email me a comment at:mike@big-db.com

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Browne Innovation Group (BIG) is a twelve-year-old strategic knowledge and information firm that began as a traditional consulting firm but in 2012 transformed its practice 100% into online learning and training. Our Courses educate and train fundraising professionals and board members how to transform their fundraising departments into effective digital-based online fundraising organizations.